Mistakes Accountants Make Providing Business Advisory – The Value Pyramid (Part 2)

By Posted in - Members Blog on December 14th, 2015 0 Comments

The top two layers of The Value Pyramid — Strategy and Innovation

The Value Pyramid
uses layers to show the various ways accountants provide value to their clients. And in our previous post we looked at the two most boring layers (at
least in your clients’ eyes):

  1. Real-Time Data (up-to-date numbers)
  2. Compliance (helping clients meet their regulatory obligations).

Don’t get me wrong. These are both valuable services. But from a client perspective they’re not exactly the most exciting things you can do for
them. So if you’re looking for ways to build client loyalty and gratitude, and generate a steady stream of referrals… well, you’d better
keep looking.

At best, these services are grudge purchases. At worst, they’re just another commodity in the marketplace. Sure, you and I both know the quality of
work done by different firms in these areas can vary enormously. But sadly for accountants the market can’t make that judgement, and so doesn’t
perceive any real difference.

And when it comes to people’s buying behaviour, it’s their perception that matters. Not your perception, but that of your
clients and the market in general.

Unfortunately, in their search for this elusive Holy Grail of providing more value to their business clients than the basics of bookkeeping and compliance,
accountants and business advisors have fallen into a trap. A trap created by well-meaning coaches, consultants and software vendors who’ve told them
they need to become Business Development Advisors (a.k.a. “strategy gurus”) to their business clients.

If you’ve ever ventured down this path, you’ve probably discovered that strategy consulting is inherently difficult to scale and delegate
beyond the most experienced people in the firm—usually its Principals or Partners. The most time-poor people in the business end up having even more
chargeable work on their plate, which is the last thing you want when you’re trying to build a successful business.

As Michael Gerber explains so simply and powerfully in his book The E-Myth, business owners (including accountants) get trapped working in their business as “technicians” doing the chargeable/revenue-creating work. But what they need to do instead is work on
the business to build a system where other people can thrive in technician and manager roles.

Entrepreneurs get this. Technicians don’t.

And so these technicians—sincere accountants who want to become Business Development Advisors to their clients—start providing services where
they personally advise business clients on Strategy.

Trouble is, to do this they need “experienced gurus” with access to known strategies they can apply to similar scenarios across different
businesses. Which is why it’s the second-highest layer in The Value Pyramid.

There are ways to leverage the experience of others—knowledgebases, business case studies, boilerplate templates, business advisory
software, and so on. But when an advisor is suggesting changes a business owner should make to their business, the last thing they should be doing is
following a script.

Forget the “cookie cutter” consulting those business coaching franchises are peddling. Clients quickly realise there’s no depth in the
advisor’s knowledge, and that all they’re doing with their shallow advice is keeping the conversation “on script”. No difficult
questions, please.

Strategic business advisors need to be able to think on their feet during conversations and consultations with clients. And that ability doesn’t come from
a book. It comes from experience which, when combined with knowledge and intelligence, garners respect from their clients who perceive them as an
authority.

Developing this competency in less experienced advisory staff can be a challenge. It requires a big investment, not only in training and mentoring but also
in attracting high-quality staff in the first place. Not to mention commitment and patience over the long term.

Building a business around Strategy work isn’t easy. It is possible, but as an accountant and business advisor you certainly have easier and
more scalable ways to add value at your disposal.

We’ll address those three ‘sweet spot’ layers in our next post. But for now let’s look at the pinnacle layer of The Value Pyramid for Accountants and Business Advisors: Innovation.

I’m passionate about innovation. My entire career has revolved around it, as has my education.

“But,” I hear you ask, “what’s the difference between the Strategy and Innovation levels in The Value Pyramid?”

I like to think of it as joining dots that are a long way apart.

Strategy is about drawing on and re-using known strategies and then making suggestions to business clients based on this personal and collective
experience. But innovation relies on creativity and the ability to create new strategies instead of just retrieving generic strategies from the
firm’s knowledge management system. And the “dots” I refer to are the various industries, business models, technologies and psychologies
that help innovative business advisors come up with new ideas and solutions for the type of business and industry they’re consulting to at the time.

Innovative business advisors can see an emerging trend, or a new technology/process in a completely unrelated industry to the one they’re advising,
and use their creativity to apply it in a new way for their clients.

Innovators are constantly “joining the dots”—seeing meaning, connections and opportunities in the world around them in ways that most
people don’t.

This isn’t just about intelligence. It’s about talent. And with the modern education system doing its best to turn creative students into
content-regurgitating automatons, it’s a rare and extremely valuable talent in the marketplace—providing you can find it.

(This is why PARADOX is supporting the inspirational work of Praxis in guiding and
training new entrants to the workforce. We’ll be talking more about Praxis soon, and how you can tap into this brilliant recruiting channel for your
business.)

If you love consulting at the Strategy and Innovation levels, great. Do it. But don’t build your entire business model and revenue generation around
it. Instead, treat it as paid research and development where you’re adding enormous value to your clients—and recovering fees commensurate to
this value—while learning from every engagement you have.

And then look at how you can apply that learning to create more scalable offerings and service delivery systems. Find out how you can recruit, train and
delegate to people and technology that can deliver as much value as possible without you (as the entrepreneur) needing to “be on the tools”.

Important note:
Earlier I referred to Innovation as the ‘pinnacle’ layer of The Value Pyramid. When I say that I don’t mean it should be your
ultimate delivery goal when designing your business model. It simply means that Innovation is the highest value an advisor can deliver. It’s like
modern-day alchemy: It creates value out of thin air. It creates new opportunities, new products and services, new businesses, even new industries.

But that doesn’t mean you should design your business around delivering innovation.

In our next post I’ll talk about the “low-hanging fruit” that can help you refocus your service offerings from real-time data and
compliance to services that add more value, generate higher fees, and give you both happier clients and a more satisfied advisory team.

And all without you needing to be on the tools.

In the meantime, we’d love you to share your experiences (in the comment section below) about what you’ve done—or observed others
doing—while venturing into the Strategy level of business advisory. Did it work for you? Have you smashed it out of the park? Was it more difficult
and costly than you anticipated? Or was it the simple “bolt on” process the business coaching franchise promised it would be?

We can’t wait to hear about it.

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